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DevOps Dollars: Why There's Big Money In Fast Software Development

Bob Davis, CMO at Plutora, began his career as an engineer and now has more than 30 years experience leading high technology companies.

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With the first quarter of 2018 behind us, many companies will be taking stock of how successfully they started the year, what targets they need to adjust, and for those trading publically, how announcing their numbers will play with investors. While individual companies evaluate performance and progress, bigger picture trends will also start to appear. DevOps is one specific technology movement that is set to impact the financial bottom line of a broad spectrum of businesses, including software vendors, web-based companies, startups and the more established enterprise market.

A term used more and more prevalently in both trade and business publications, DevOps has its roots in trying to answer the question of how to keep modern websites up and running. A compound of the words "development" and "operations," the term first emerged in 2008 with the aim of establishing a practice in which software developers and operations professionals collaborated to create applications faster, with a continuous delivery of value to end users. It is the union of these common approaches, supported by tools and technologies to enable automation and reliability at a smaller cost, that has given rise to the DevOps culture.

On the surface, this may not seem like a ground-breaking development in the tech space -- getting teams to collaborate with tools to work better and faster seems fairly obvious. If we take a step back and consider those companies embracing DevOps, though, a very different picture emerges regarding the applications they have produced and the related success. We need only to look at household names such as Amazon, Netflix, Target and Fidelity Worldwide Investments. All of these companies have mammoth customer bases that demand superior service and accessibility, and DevOps is the methodology behind their phenomenal business achievements.

Predictions around the DevOps market size range from $8.8 billion by 2013 to $12.85 billion (purchase required) by 2025 and a growth rate of 19% by 2020. These numbers are easily comparable with the 5G mobile network market and Amazon’s cloud business. When combined with the tangible successes of the aforementioned big-name brands, DevOps earns its place right up there with tech’s smart money trends, including internet of things (IoT), edge computing, big data and AI.

The last six months have also seen a targeted drive to promote additional investment in DevOps companies. This has resulted in GitLab -- a platform that Plutora integrates with -- raising $20 million in funding, XebiaLabs announcing a $100 million funding round and CircleCI receiving an investment of $31 million. Large funding rounds such as these are indicative of a maturing market and validate that there is a real need for enterprises to leverage the promise of DevOps to deliver on customers’ expectations of innovation. It also reinforces the need for a collaborative team environment, not just smart tools.

Further evidence of the significance of the DevOps market is when mergers and acquisitions begin happening. Back in 2016, 451 Research predicted that there were 300 companies that could have been mergers and acquisitions (M&A) or initial public offering (IPO) candidates that year and this trend has only continued to progress. In 2018 alone, we have already seen CloudBees and GitLab make strategic acquisitions in this space and I predict that this is only the beginning of a rush to consolidate smart point tools into bigger platforms that cater to the DevOps cycle on all levels. This type of software will only become more vital to success as development cycles speed up and environments continue to grow.

Over the past two years, the four major cloud vendors -- Amazon, IBM, Google and Microsoft -- have all doubled down on DevOps, making it possible to have a complete cloud-based DevOps toolchain. In today’s landscape, the ever-present conversation topic of the cloud is also the preferred development platform for developers and these vendors are fully investing in self-service access to continuous integration and DevOps tools.

As DevOps continues its path of domination, vendors are tackling questions of security, AI and machine learning as ways to advance the industry and provide further offerings for companies to leverage from this growing market. I predict that in the rest of 2018 we will see an increase in market growth above what has been predicted by the analysts, which will include more consolidation as this expanded growth matures the market. We will also notice an influx of large, established software vendors entering the DevOps space to bolster their product portfolios, augmenting their offerings to account for fading, legacy applications and tools.